Auto-enrolment thresholds 2022/23

ICB’s Payroll Policy Advisor, Ian Holloway of i-Realise, discusses the latest auto-enrolment thresholds announcement

Another set of frozen thresholds was announced on 08 February 2022 when the Department for Work and Pensions (DWP) produced their ‘Review of the automatic enrolment earnings trigger and qualifying earnings bands for 2022/23’ supporting analysis.  This confirms: 

• The earnings trigger remains frozen at £10,000
• The Lower Qualifying Earnings Band (QEB) will be frozen at 2021/22 limits
• The upper QEB will remain linked with the National Insurance Upper Earnings Limit (UEL), though this is also frozen at 2021/22 levels

Per pay period

The above annual values mean the following values per pay reference period:

The supporting analysis says that freezing the Lower QEB ‘supports the principle of ensuring that everyone who is automatically enrolled would continue to pay contributions on a meaningful proportion of their income’.

It is worthwhile noting that the analysis makes reference to the December 2017 Automatic Enrolment Review which contains the following ‘ambitions’:

• Removal of the Lower QEB altogether in the mid-2020s.  For workers and employers where pension contributions are based on band earnings (between the Lower and Upper QEB), this means that contributions will be payable from £1
• The reduction of the auto-enrolment lower age limit from 22 to 18.  This has the impact of bringing more workers into pension saving

Attention

Bookkeepers should be aware of the freezing of another set of thresholds and consider whether this should form part of communication to clients/employers. 

Further, they need to check with their payroll software providers to ensure the product can accommodate the fact that the link with the National Insurance thresholds has been broken.